Mothercare has confirmed it is preparing to appoint administrators to its UK retail arm later today in the latest blow to the British high street.
The company announced this morning that a notice of intent to appoint administrators to Mothercare UK and Mothercare Business Services has been filed with the court.
The companies will continue to trade and the administration is a “necessary step in the restructuring and refinancing of the group”.
Mothercare said plans for the future of the group are “well advanced and being finalised for execution imminently”.
If no buyer is found, 2,500 jobs could be at risk.
A strategic review of the group – which began in May last year – led to the decision that Mothercare’s UK retail operations were “not capable of returning to a level of structural profitability”, the company said.
“Through this process, it has become clear that the UK retail operations of the group, which today includes 79 stores, are not capable of returning to a level of structural profitability and returns that are sustainable for the group as it currently stands and/or attractive enough for a third party partner to operate on an arm’s length basis,” Mothercare said in a statement this morning.
“Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK.”
The parent group – which has more than 1,000 stores internationally – is not affected by the administration. Mothercare Group reported profit of £38.3m internationally in the financial year to the end of March, while the UK retail operation lost £36.3m.
A further announcement will be made in due course, the company added.
Yesterday, Sky News reported that an insolvency process could spark an effort to find a buyer and potentially another restructuring.
Today Mothercare’s share price fell as low as 7p, and had dropped 28 per cent to just over 8p per share by 9.15am.